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11. Fama and French (1991) and Reinganum (1988) found that firms with low market/book ratios had...

11. Fama and French (1991) and Reinganum (1988) found that firms with low market/book ratios had higher stock returns. This study provides evidence against __________ . A) Technical analysis B) Fundamental analysis C) Semi-strong form of market efficiency D) Strong form of market efficiency

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Answer #1

The correct answer is C) Semi Strong form of market efficiency

Semi Strong form of market efficiency states that the stock price accumulates all the information available in the market instantly whether the information is materialistic or non materialistic and the stock price quickly adjust the price according to the market news. This means it is impossible for the investor to identify the shares that are undervalued and gain higher return than the market even if they use technical ir fundamental analysis.

Therefore, the answer is clearly option C

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